Since the beginning of this year new laws have been in place around underquoting. The reforms are designed to stop real estate agents understating prices.
Information for Vendors
Some key points for Vendors:
- a Vendor can instruct an agent not to reveal the estimated selling price to prospective purchasers (note this applies to advertising material also).
- an agent cannot conduct a marketing campaign utilising illegal marketing practices, therefore an agent must not:
- promote a price for the property by stating “offers above“;
- writing a price with a plus sign after the price;
- if providing an estimate as a range, the highest price cannot be more than 10% above the lower range.
- the Agency Agreement must contain a selling price or a selling range (per the above) which is reasonable and able to be supported by evidence, any revision to the proposed selling price must also be conveyed in writing.
Information for Purchasers
As underquoting is now illegal, this assists potential buyers from wasting time and money preparing to buy a property they cannot afford. Purchasers can be reassured that real estate agents in NSW must;
- base their estimated selling price on relevant evidence such as recent sales;
- not use vague statements such as “offers above…”; and
- maintain a record of prices quoted for the property.
Just because a property sells for higher than the advertised price, this does not mean that an agent is guilty of underquoting. It simply can be a result of market forces and buyuer competition that cannot be predicted.
The underquoting reforms will assist all parties to a NSW residential property transaction to enjoy greater transparency in the negotiations and lead up to any conveyance.